Problem 1-6 Answers

Problem 1-6 Answers - Total debt to total equity = 1 Total...

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Problem 1-6 Liabilities and Equity Assets: Current liabilities 100,000 (g) Current assets: 75,000 (h) Noncurrent liabilities 150,000 Compute (b) -(g) Cash 75,000 (c) Total liabilities 250,000 (b) Accounts receivables 50,000 (d) Inventory 300,000 Given Total equity 250,000 (a) Noncurrent assets 500,000 (e) Total liabilities and Equity 500,000 Computed (a) + (b) Total assets 1,000,000 Given Sales 500,000 Computed (Sales - Gross profit) Cost of goods sold 500,000 (50% of sales) Gross profit 450,000 Given Expenses 50,000 Computed (Gross profit - Expenses) Net income (a) Given Return on end of year equity = 20%. Formula- Net income / end of year equity = 20% $50,000 / equity = 20% Equity = $250,000 (b) Given -
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Unformatted text preview: Total debt to total equity = 1 Total debt / $250,000 = 1 Total debt = $250,000 (c) Given - Accounts receivable turnover = Sales / Average accounts receivables 16 = 1,000,000 ($50,000 + X) /2 Ending accounts receivab = 75,000 (d) Days' sales in inven = (Inventory X 360)/ Cost of goods sold 36 = (Inventory X 360)/ Cost of goods sold 36 = (inventory X 360 / $500,000 Ending inven = 50,000 (e) Total as = Toal liabilities + Equity = $250,000 + $250,000 = 500,000 (f) Current a = Total assets - Noncurrent assets = $500,000-$300,000 = 200,000 = (g) Curren = Current assets / Current liabilities 2 = $200,000/ X Current liab = 100,000 (h) = Current assets - Accounts receivables - Inventory = $200,000 -$75,000-$50,000 = 75,000...
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